Ratings agency Fitch has reiterated warnings that the US could lose its AAA credit rating if it fails to address its growing federal debt.
Last month Fitch cut its outlook on the US from stable to negative, saying the congressional super committee’s failure to come up with at least $1.2 trillion (£770 billion) in deficit-reduction measures made a downgrade more likely.
In a new warning, the agency predicts that the US will need to identify another $3.5 trillion in spending cuts if federal debt is to be stabilised at about 90% of GDP by 2015.
“Federal debt will rise in the absence of expenditure and tax reforms that would address the challenges of rising health and social security spending as the population ages,” Fitch says.
“The high and rising federal and general government debt burden is not consistent with the US retaining its AAA status despite its other fundamental sovereign credit strengths.”
The agency adds that the US has until 2013 to formulate a “credible plan” to tackle its growing debt or its top credit rating could be at risk.
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